Occupation rights if one partner is the sole owner

Where a couple are cohabiting and the property is in one name only, the partner who doesn't own the home may not have an automatic right to occupy. The non-owning partner usually has the status of a bare licensee, ie they are only entitled to remain in the family home as long as the cohabiting owner gives permission. If the owner wants the partner to leave, all that is legally required is 'reasonable notice'. Once the notice expires, the partner becomes a trespasser.

A partner who doesn't own the home may be able to show that they have:

• a beneficial interest

• a contractual or irrevocable licence

• rights by estoppel

If a non-owning partner can show that they have a 'beneficial interest' in the family home, they may have a right to occupy the home and/or a right to a share in the value of the property. Establishing a beneficial interest may also give the partner a defence to any action taken by the owner to evict them and may also give them rights that they would not otherwise have in regard to occupation orders and long-term rights to the home.

The courts will need to look in detail at the facts of each case in order to establish whether a beneficial interest exists and, if so, what will be the result on each party's interest in the property. The law in this area is extremely complex and the information below should only be used as a general guide.

A beneficial interest is an interest in land that gives a person a financial share in a property and/or a right to occupy a property. There are three different ways in which a beneficial interest can arise:

• by express declaration of interests

• by resulting trust

• by constructive trust

Family mediation can help a separating couple to reach an agreement about the interest of the partner who doesn't own the home without going to court.

If it is not possible for the couple to come to an agreement, and there is no express declaration of interests (see below), the partner can apply to the court for a declaration of the nature of the trust between them.

The sole owner and their partner may have made an express declaration of how they intended to share the property, by signing a trust deed or a written agreement. For example, if the sole owner put up the money for the deposit and made all the mortgage payments but signed a trust deed stating that their partner would have a one third share in the property, this would always be enforced by the courts, as long as there is no evidence of fraud or mistake.[1]

A constructive trust occurs where the court holds that the behaviour of the parties is such that the court will regard one party as a trustee for another. A 'common intention trust' arises by operation of law where the parties agree that beneficial ownership should be held in a particular way but do not follow the formalities (eg they do not execute a written declaration of trust) and one of the parties suffers detriment in reliance on the agreement.

Where an informal agreement is relied on, the terms of that agreement must be sufficiently certain for the courts to imply a constructive trust. In one case,[2] the Court of Appeal found that a letter purporting to record a verbal agreement on beneficial interest made between separating cohabitants was sufficient evidence of their intentions regarding the family home despite the acknowledgement in the letter that the agreement was to be finalised at a later date in a formal document (this did not happen). The terms of the agreement were clear and comprehensive enough to form the basis of a binding agreement under which the family home was held on trust by one former partner (who was the sole owner) giving both the right to live in it until a specified event occurred, at which point the other former partner no longer had a right to occupy.

Case law has established that three things are normally necessary to establish such a constructive trust:[3]

• there must have been a common intention that the non-owner would gain a beneficial interest in the property

• there must be evidence of express discussions giving rise to the common intention

• the non-owner must have acted to their detriment by relying on the intention that they would both have a beneficial interest

The principles applicable to a constructive trust are the same whether the parties are in a relationship such as husband and wife, business associates or friends.[4]

For example, if, after discussions with her partner and reassurances from him that he would always look after her, a woman gave up a secure tenancy and her job in order to live in his house and care for his children from a previous relationship so that he could start a new business, and she paid the bills while money was tight, this could be found to be a constructive trust. This means that even if the partner who didn't own the home has not contributed in financial or equivalent terms to the purchase, they may still be able to establish a beneficial interest.

In many cases, it will not be possible to establish beyond doubt whether a beneficial interest exists, and there may be disagreement between the couple as to what actually happened and what their intentions actually were. In this situation, it will be necessary to apply to the court for a declaration. The court will make a decision on the facts of the case. However, a court may be reluctant to find that a beneficial interest exists, so it will always be necessary to get the opinion of a practitioner experienced in property law.

If a partner who doesn't own the home wants to try to establish a beneficial interest, then they should start proceedings in the County Court or the High Court under section 14 of the Trusts of Land and Appointment of Trustees Act 1996. Heterosexual couples who have been engaged in the last three years can also use section 17 of the Married Women's Property Act 1882, and lesbian and gay couples who have had a civil partnership agreement in the last three years can use section 74 of the Civil Partnership Act 2004.

If the partner who doesn't own the home has successfully established a beneficial interest, then each party's share in the property can be quantified in relation to the value of the property. The value of the respective shares should be decided when the property is sold or when one party buys out the other, not when the couple cease to live together.[5] If one party has stayed in the property and has spent money that has improved its value, this may be taken into account.

The court will look at any express declaration about the shares in the property or, in the absence of such a declaration, may look for evidence of a common intention regarding the shares.

It may be possible for the partner who doesn't own the home to argue that they have a contractual or irrevocable licence. A contractual or irrevocable licence may arise if it can be shown that there is a form of contract or agreement between the parties, for example where one partner gives up their home to move into a house which their partner had bought to look after their children on the understanding that they could live there while the children were of school age, or unless some other situation arose which made it unreasonable for them to stay in the home.[6]

If a contractual or irrevocable licence is established, then the partner who doesn't own the home can stay until the particular event agreed upon occurs. It should be noted that contractual or irrevocable licences are very difficult to establish, and the distinction between the circumstances giving rise to these licences and a beneficial interest is not always clear.

The partner who doesn't own the home may be able to argue that they have rights to remain by estoppel. For an estoppel to arise, two criteria must be fulfilled:

• the claimant must have been misled by the owner into believing that they would acquire a beneficial interest in the property, and

• they must have acted to their detriment in reliance on that belief

An example of this might be if the partner who doesn't own the home acted to their detriment to live with the owner of the family home, for example by giving up a job or a home,[7] or if they made regular payments 'towards the house' in order to enable the legal owner to afford keeping it.[8]

If the partner can establish that they have rights by estoppel, the courts may decide on the appropriate remedy, for example by granting them a licence, a tenancy or a financial share in the property.

Where there is a mortgage in one person's name, they are liable for the mortgage payments, regardless of who is occupying the property. The mortgage lender can take possession action for non payment of the mortgage and evict any occupiers if a possession warrant is issued by the courts.

If person with the mortgage liability has left the home and stopped making mortgage payments, the other party may want to pay the mortgage to avoid possession proceedings being taken by the lender. In the short term, a cohabitant may be able to obtain an occupation order that will include the right to pay the mortgage but not the liability for it,[9] unless the court makes an order requiring that party to make the payments[10]

If the property has a sole owner but there is a mortgage in joint names, then both parties are jointly and independently liable for the mortgage payments, regardless of who is occupying the property. In a relationship breakdown situation, if one party leaves the property and stops contributing to the mortgage payments, the lender is entitled to require payments from the remaining party to cover the entire mortgage, and it is not possible to argue that they are only liable for a particular share. This is known as 'joint and several liability'.